Question

1. The following transactions of Fernglen Limited, a manufacturer of children’s’ tables and chairs took place during April 2017. MODULE MANAGEMENT ACCOUNTING TOTAL MARKS 60 MARKS APRIL 01 Stock on hand 600 units @ R220 per unit 03 Issued to production 350 units 08 Returned from production to stores 50 units 17 Purchased from supplier 2000 units @ R230 per unit 20 Issued to production 800 units 21 Returned to supplier (purchased on 17 April 2017) 200 units 30 Issued to production 800 units 1.1 Determine the value of closing inventory based on the First-in-first-out (FIFO) method. (13 marks) 1.2 Ricey Wholesalers sells 8 000 bags of rice each year. The inventory holding cost of one bag of rice is R5. The cost of placing an order for stock is estimated at R160. 1.2.1 Calculate the EOQ. (4 marks) 1.2.2 Calculate the number of orders that should be placed per annum. (3 marks) (Round off calculations to the nearest whole number.)

Answer 1